3 reasons why 'charitable giving' law is good for business

Many restaurateurs already participate in food-donation programs because it’s the right thing to do, but may not realize the associated financial benefits.

The NationalRestaurant Association (NRA) strongly supported H.R. 4719, the America Gives More Act, for three big reasons, says the NRA’s David Koenig, vice president of tax and profitability: 

• All businesses would be allowed to take an enhanced federal tax deduction when they donate food inventory to charity.
• A tax deduction helps restaurants recoup some of the costs associated with preparing food earmarked for donation.
• An increase in food donations helps cut food waste at restaurants, helping to feed those in need instead of sending food to landfill. 

The House of Representatives passed the bill July 17, but the Senate still needs to act.

The House bill would make permanent a temporary provision that lets all businesses take an enhanced deduction for food inventory donations.  The tax deduction was limited to C corporations until 2005, when Congress expanded it to cover all businesses, including subchapter S corporations and limited liability companies. That expansion expired at the end of 2013. C corps typically are companies that pay federal taxes separately from their owners and shareholders.

Koenig says it isn’t clear whether or when the Senate will vote on a final bill. A Senate committee voted earlier this year to extend the enhanced food-donation tax deduction. He noted the Senate is likely to extend the measure for a year or two.

The NRA has long been an active voice in supporting the charitable giving measure and the move to make the temporary provision permanent.

“The deduction for charitable donation of food inventory is a critical tool in alleviating hunger because it helps offset costs associated with preserving, storing and transporting food inventory donations,” Koenig said.